Red ink trails nation's airlines

Friday

Jan 30, 2009 at 2:00 AM

ATLANTA — Deep capacity cuts, checked bag fees and aggressive fare sales couldn't stop the airline industry's bleeding from the impact of bad bets on fuel hedges and the drop-off in demand due to the weak economy. After more carriers posted losses yesterday, the total fourth-quarter red ink for the top nine U.S. carriers by traffic rose to $4 billion.

THE ASSOCIATED PRESS

ATLANTA — Deep capacity cuts, checked bag fees and aggressive fare sales couldn't stop the airline industry's bleeding from the impact of bad bets on fuel hedges and the drop-off in demand due to the weak economy. After more carriers posted losses yesterday, the total fourth-quarter red ink for the top nine U.S. carriers by traffic rose to $4 billion.

As business and leisure travelers across the country watch what they spend amid the worst financial crisis in decades, the first quarter of this year, which ends March 31, will add more losses for several airlines, but the industry is eyeing profits after that, if fuel prices remain low and the economy doesn't weaken further.

In the meantime, the belt tightening at the nation's air carriers will continue.

The Seattle-based operator of Alaska Airlines and Horizon Air reported that it swung to a $75.2 million loss in the fourth quarter. Houston-based Continental Airlines Inc. said it lost $266 million in the quarter. Tempe, Ariz.-based US Airways Group Inc. posted a $541 million quarterly loss, and New York-based JetBlue Airways Corp. disclosed a $49 million pretax loss for the final three months of 2008.

Those reports followed losses posted earlier this week and last week by Atlanta-based Delta Air Lines Inc., Orlando, Fla.-based AirTran Holdings Inc., Chicago-based UAL Corp. — parent of United Airlines — and Fort Worth, Texas-based AMR Corp., parent of American Airlines. Not even usually profitable Southwest Airlines Co. was immune, as it also posted a fourth-quarter loss.

Advance bookings aren't encouraging for several carriers, at least in the next two months.

Beyond that, airlines see brighter skies as they unwind fuel hedge contracts they entered into last year while oil prices were at record levels only to be stuck with them when oil prices made their dramatic slide. And they say the capacity many airlines have shed should pay dividends in the long run.

US Airways Chief Executive Doug Parker said the capacity cuts "have significantly softened the blow from the economic downturn that we as an industry now face."

The airlines have been trying to preserve cash to weather the economic crisis. Several also have said they will cut more capacity this year.